The Rockefellers, a family synonymous with oil and wealth in the US, are among a coalition of ultra wealthy investors that have today announced they will divest $50 billion in fossil fuel assets.
The announcement came just one day before the UN Climate Summit opens in New York.
The family is part of the Global Divest-Invest initiative that encourages individuals from all walks of life to divest from fossil fuels and invest in climate solutions.
The Rockefeller Brothers Fund, which manages $860 million, said in a statement that their announcement was the result of growth uncertainty over the future of fossil fuels and growing concerns within the family over climate change.
Ben Caldecott, programme director at the University of Oxford's Smith School of Enterprise and the Environment, believes the family’s announcement will help educate investors on investment risks associated with assets such as fossil fuels.
“Ultra-high net worth individuals can quickly react to the environment-related risks than can create stranded assets,” Caldecott said, referring to assets that have suffered from unanticipated or premature write-downs.
“Their interest has already been a big driver of demand for new products from announcements and I think [the announcement] will be an important driver of demand, especially in the nearer term,” he added.
In a statement, Rockefeller Brothers Fund director Stephen Heintz, the fifth son of David Rockefeller, said that the family’s decision stemmed from a mixture of investment risk and ethical considerations.
"We are quite convinced that if [John D Rockefeller] were alive today, as an astute businessman looking out to the future, he would be moving out of fossil fuels and investing in clean, renewable energy,"Heintz said.
John D Rockefeller is one of the most renowned business magnates in US history, establishing Standard Oil in 1870 and running it for three decades.
Heintz said the divestment process would begin by limiting the fund’s exposure to coal and tar sands with the ultimate goal of reducing these investments to less than 1% by the end of 2014.
Caldecott believes that the Rockefeller announcement will cause a domino effect among smaller investors and help raise the profile of issues surrounding fossil fuel investments.
“Investors, analysts, and research institutions are quickly getting to grips with the drivers of risks like climate change, how they might be correlated, and what this then means for asset specific and total fund performance. We’re still at an early stage, but analytical capabilities are improving all the time,” he said.
The UN Climate Summit starts on Tuesday at the UN headquarters in New York where talks will be focussed on establishing a universal climate agreement to be signed by all nations by the end of 2015.